In the past two weeks, joint efforts by the National Consumer Commission (NCC), the National Prosecuting Authority’s Johannesburg office of the Asset Forfeiture Unit (AFU) and the Financial Intelligence Centre (FIC) led to the seizure of assets and the freezing of bank accounts relating to a pyramid scheme, the NCC said in a statement. More than 228 900 consumers had been defrauded in the scheme, which had amassed millions of rands.
Established in terms of the Consumer Protection Act 68 of 2008 (CPA), the NCC is responsible to enforce this Act. Its responsibilities include receiving complaints concerning alleged prohibited conduct or offences and investigating complaints and evaluating alleged prohibited conduct or offences.
The Commission’s investigation revealed that Up Money (Pty) Ltd (Up Money) contravened section 43(2)(b) of the CPA by promoting and causing members of the public to join and participate in a pyramid scheme.
The modus operandi of Up Money was to use social media to solicit members of the public to participate in the scheme. In order to receive the promised meat and/or grocery packs, participants were required to pay a once-off joining fee of R180 and to recruit five new participants. As is typical of all pyramid schemes, new participants made up the base of the pyramid and provided funding for participants who were recruited prior to them and who occupied higher positions in the pyramid.
Following requests from the NCC, the Financial Intelligence Centre (FIC) analysed Up Money’s bank statements and established that the scheme, which promoted itself as a stokvel, had received an amount of R42 720 501.82 between 4 May 2020 and 2 July 2020. Some of the funds were then moved into the business account of another company of which one of the directors of Up Money is the sole director. More than R14.5 million had been dissipated through point of sale purchases at various retail stores. In addition, three luxury motor vehicles were also purchased namely, a Hummer, a Jaguar and an Audi TT.
Over the past two weeks, based on evidence provided by the FIC and the NCC, the Asset Forfeiture Unit obtained preservation orders in the Gauteng Local Division, Johannesburg for the preservation of the following assets:
- An amount of R18 361 521.88 held in a First National Bank Gold business account in the name of Up Money (Pty) Ltd.
- An amount of R205 586.73 held in a First National Bank Gold business account in the name of Uniitco (Pty) Ltd. This further account was identified by the FIC as having received the proceeds from the First National Bank Gold business account of Up Money in an amount of R4 million.
- Three luxury vehicles: an Audi TT, a Hummer H3 and a Jaguar XKR Coupe, which were purchased directly from the Uniitco (Pty) Ltd (Uniitco) bank account.
Up Money and Uniitco, are linked through its directorship and business address. The directors of UP Money are both signatories on its business bank account. Uniitco has a sole director who is a signatory on its business bank account as well as that of UP Money’s. Although Uniitco paid for all the vehicles, the vehicles were not registered as company assets but in the private name of a director.
“The effective co-operation of law enforcement agencies and the NCC serves as a deterrent to offenders and ensures that crime will not pay,” the Commission said. “Consumers are reminded that as participants or members of a pyramid scheme they are legally responsible for the claims they make about the company, its product, and the business opportunities it offers. The NCC also warns consumers that it is prohibited to participate in or promote a pyramid or multiplication scheme.
“The NCC, the FIC and the AFU will continue with their efforts to prevent even more people being swindled out of their money. Members of the public are warned not to fall victim to schemes such as these which make unrealistic claims to encourage people to part with their money while initiators of the schemes enrich themselves.”